Element 25 and OM Materials agree binding manganese supply contract

Forging Forward: Element 25 Secures Cornerstone Manganese Offtake for Butcherbird Expansion

Perth-based mineral developer Element 25 Limited has announced a pivotal long-term binding offtake agreement that significantly de-risks its Butcherbird Manganese Project in Western Australia’s resource-rich Pilbara region. The agreement, signed through Element 25’s wholly-owned subsidiary Butcherbird Operations Pty Ltd, secures OM Materials (OMM), a subsidiary of Singapore-listed OM Holdings Limited (OMH), as the exclusive global buyer for all manganese concentrate produced at the expanded Butcherbird Mine. This landmark deal, made public on August 4, 2026, is a crucial step for Element 25 as it advances its ambitious expansion plans, ensuring a stable revenue stream and providing financial certainty for one of Australia’s significant emerging manganese producers.

A Strategic Alliance for Manganese Supply

The binding offtake agreement establishes a formal and long-term supply relationship between Element 25 and OM Materials, building upon an existing connection. OM Materials, a key player in the manganese ferroalloy market, will receive all manganese concentrate meeting agreed specifications from the Butcherbird Mine. This comprehensive coverage, however, includes strategic carve-outs explicitly reserving material for Element 25’s future downstream processing initiatives, specifically targeting the production of battery-grade, high-purity manganese sulphate. This provision underscores Element 25’s dual strategy: serving the traditional manganese market while positioning itself for the burgeoning electric vehicle battery sector.

Justin Brown, Managing Director of Element 25, highlighted the strategic importance of the partnership. “This agreement secures a high-quality, long-term offtake partner for manganese concentrate produced at our expanded Butcherbird Operations, extending our existing relationship with OMH and its subsidiary OMM,” Mr. Brown stated. He further emphasized, “OMH has established downstream smelting capability, providing a strong commercial foundation for the Butcherbird Project over the initial five years of operation, and potentially beyond that time frame.” This underscores the symbiotic nature of the agreement, linking Element 25’s upstream mining operations with OM Holdings’ established downstream processing infrastructure.

Operational Scale and Resource Longevity

The Butcherbird Project is poised for substantial growth under Element 25’s expansion plans. The company is actively advancing its Butcherbird Expansion Project, which targets an impressive increase in output to 1.1 million tonnes per annum (Mtpa) of manganese concentrate. Such a production volume would establish Butcherbird as a significant contributor to the global manganese supply chain. Supporting this ambitious production target is a robust and recently updated ore reserve. The Butcherbird operation currently boasts an ore reserve of 101.4 million tonnes (Mt) at an average grade of 10.4% manganese. This substantial reserve base is projected to support the planned production rate for more than 18 years, offering remarkable operational longevity and long-term supply security for OM Materials.

The quality specifications of the manganese concentrate produced at Butcherbird are aligned with standard industry benchmarks, ensuring its suitability for various applications, particularly in ferroalloy production for the steel industry, which remains the primary consumer of manganese globally. The consistency with established industry standards facilitates its integration into OM Materials’ existing processing streams and provides confidence to end-users regarding product quality and reliability.

Key Commercial Terms and Financial Underpinnings

The commercial framework of the offtake agreement is designed to provide stability and financial support for Element 25’s project development. The contract is set for an initial five-year term, commencing from the first shipment of concentrate, with an embedded option to extend for an additional five years. This ten-year potential duration offers considerable long-term security for both parties.

A crucial feature of the agreement is its “take-or-pay” structure. This clause obligates OM Materials to either take the agreed quantity of manganese concentrate or pay for it, regardless of whether they take physical delivery. Such a provision is highly advantageous for Element 25, as it guarantees a baseline revenue stream and mitigates market demand fluctuations, thereby improving financial predictability and enhancing the project’s bankability.

Pricing for the manganese concentrate will be determined by reference to international manganese ore benchmarks. This market-linked pricing mechanism ensures that Element 25 benefits from favorable market conditions while remaining competitive. The pricing also includes adjustments for product quality, rewarding superior concentrate specifications, and is subject to periodic reviews to reflect evolving market dynamics. Furthermore, the agreement outlines defined terms for shipping, payment, and the take-or-pay obligations, providing a clear operational and financial pathway for Element 25.

Critically for a project in its development phase, the agreement also includes prepayment provisions. These financial advances are designed to assist Element 25 with the Butcherbird Expansion Project’s upfront cash flow needs, which are substantial for any large-scale mining development. Such prepayments are a testament to OM Materials’ commitment to the partnership and its confidence in the Butcherbird Project’s future success. While OM Materials holds exclusive global rights to market the manganese concentrate meeting the agreed specifications, limited exceptions are in place for non-conforming material and for quantities explicitly reserved for Element 25’s own downstream processing requirements, safeguarding its strategic ambitions in the battery materials sector.

Navigating Project Development and Market Dynamics

As with all major capital projects, the Element 25-OM Materials offtake agreement is conditional upon the satisfaction of several customary prerequisites. These conditions include securing necessary board approvals from both entities, finalizing project financing – which notably includes potential funding support from the Northern Australia Infrastructure Facility (NAIF) – and obtaining all requisite regulatory clearances. The NAIF, a Northern Australian development financier, plays a significant role in supporting infrastructure projects that contribute to economic growth in the region, and its involvement would further validate the strategic importance of the Butcherbird project.

The successful fulfillment of these conditions will unlock the full potential of the Butcherbird Expansion Project. In the broader market context, manganese remains indispensable. While approximately 90% of global manganese production is consumed by the steel industry, where it acts as a deoxidizer and desulfurizer and imparts strength and hardness, its role in advanced battery chemistries is rapidly gaining prominence. High-purity manganese is a key component in certain lithium-ion battery cathodes, essential for electric vehicles and renewable energy storage solutions. Element 25’s strategic decision to reserve material for future battery-grade production positions it to capitalize on this growing demand, diversifying its market exposure beyond the steel sector.

Butcherbird’s Path to Production

The signing of this offtake agreement follows other significant milestones in the Butcherbird project’s development timeline. In May 2026, Element 25 announced earlier deals for critical mining and haulage services, demonstrating a systematic approach to de-risking and progressing the project. These foundational contracts, alongside the new offtake agreement, pave the way for the physical development and operational ramp-up of the mine.

Element 25 anticipates that mechanical completion and commissioning of the Butcherbird Expansion Project will occur in the first quarter of calendar year 2027. This timeline is contingent upon the finalization of all outstanding contracts and the successful resolution of the aforementioned conditions precedent, particularly project financing and regulatory approvals. The targeted Q1 2027 commissioning would mark the culmination of years of exploration, development, and strategic planning, transitioning Butcherbird from a development project to a significant operating mine.

Future Outlook: A Cornerstone for Element 25 and OM Holdings

The binding long-term offtake agreement between Element 25 and OM Materials represents a significant milestone for both companies and the broader manganese industry. For Element 25, it provides crucial revenue certainty, underpins project financing efforts, and strengthens its market position as it moves towards expanded production. The integrated strategy of supplying both traditional ferroalloy markets and reserving capacity for future high-purity manganese sulphate production offers robust growth potential and resilience against commodity price fluctuations.

For OM Holdings and its subsidiary OM Materials, this agreement secures a reliable, long-term supply of high-quality manganese concentrate from a reputable Western Australian producer. This stable feedstock is vital for OM Holdings’ downstream smelting operations, ensuring consistent production of ferroalloys and reinforcing its competitive standing in the global market. The partnership exemplifies how strategic alliances can drive growth, de-risk large-scale mining projects, and foster stability within the international commodity supply chains, contributing to the energy transition and industrial demands of the future.